*SB0352.1*
January 21, 2022
SENATE BILL No. 352
_____
DIGEST OF SB 352 (Updated January 20, 2022 7:43 pm - DI 55)
Citations Affected: IC 24-4.5; IC 28-7; IC 35-45.
Synopsis: Supervised consumer loans. Amends the Uniform
Consumer Credit Code to provide that the authorized loan finance
charge for a consumer loan, other than a supervised loan, that is
entered into after June 30, 2022, may not exceed 36% (versus 25% for
a consumer loan that is entered into before July 1, 2022) per year on the
unpaid balances of the principal. Amends the definition of "supervised
loan" to mean a consumer loan that: (1) is entered into before July 1,
2022, and with respect to which the rate of the loan finance charge
exceeds the authorized 25% annual rate for consumer loans under
current law; or (2) is entered into after June 30, 2022, and is made in
accordance with the requirements for supervised loans set forth in the
bill. Sets forth requirements and limitations with respect to the
following for supervised loans made after June 30, 2022: (1)
Authorized fees and charges. (2) The maximum principal amount. (3)
The minimum and maximum lengths of the loan term. (4) Information
and disclosures to be included in the loan contract. (5) A borrower's
right to rescind a supervised loan transaction. Provides that when a
borrower enters into a supervised loan, the lender shall provide the
borrower with a pamphlet approved by the department of financial
(Continued next page)
Effective: July 1, 2022.
Zay, Bohacek
January 11, 2022, read first time and referred to Committee on Insurance and Financial
Institutions.
January 20, 2022, amended, reported favorably — Do Pass.
SB 352—LS 6946/DI 101 Digest Continued
institutions (department) that describes: (1) the availability of debt
management and credit counseling services; (2) the borrower's rights
and responsibilities; and (3) the availability of the 211 telephone
dialing code for human services information and referrals. Sets forth
prohibited acts and practices in connection with a supervised loan.
Provides that a lender may not take a security interest in real or
personal property in connection with a supervised loan, other than a
security interest in a personal check of the borrower. Specifies the
applicability of the bill's provisions to supervised loans made by
persons exempt from: (1) the bill's finance charge limitations; and (2)
licensure by the department. Requires a lender that makes at least one
supervised loan in Indiana during a calendar year to remit to the
department: (1) an annual fee of $250; and (2) an additional fee of
$250 per Indiana branch location (after the first location). Establishes
the consumer financial education fund (fund), and provides that the
annual fees collected from lenders making supervised loans are to be
deposited in the fund. Provides that the fund is to be: (1) administered
by the department; and (2) used by the department for paying expenses
relating to consumer financial education. Requires a person that enters
into at least one supervised loan transaction in Indiana in any calendar
year to file with the department a report concerning the person's
business and operations with respect to that calendar year. Requires the
director of the department to prescribe: (1) the time and manner for
filing the report; and (2) the information to be included in the report.
Requires the department to publish and make available to the public,
at least annually, an analysis of the information provided in the reports
filed with the department. Sets forth the information that must be
included in the department's analysis. Makes conforming amendments
to existing references to supervised loans throughout the Indiana Code.
SB 352—LS 6946/DI 101SB 352—LS 6946/DI 101 January 21, 2022
Second Regular Session of the 122nd General Assembly (2022)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2021 Regular Session of the General Assembly.
SENATE BILL No. 352
A BILL FOR AN ACT to amend the Indiana Code concerning trade
regulation and to make an appropriation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 24-4.5-3-109 IS AMENDED TO READ AS
2 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 109. (1) "Loan finance
3 charge" means the sum of:
4 (a) all charges payable directly or indirectly by the debtor and
5 imposed directly or indirectly by the lender as an incident to the
6 extension of credit, including any of the following types of
7 charges which are applicable: interest or any amount payable
8 under a point, discount, or other system of charges, however
9 denominated, premium or other charge for any guarantee or
10 insurance protecting the lender against the debtor's default or
11 other credit loss; and
12 (b) charges incurred for investigating the collateral or
13 credit-worthiness of the debtor.
14 The term does not include charges as a result of default, additional
SB 352—LS 6946/DI 101 2
1 charges (IC 24-4.5-3-202), delinquency charges (IC 24-4.5-3-203.5),
2 or deferral charges (IC 24-4.5-3-204). With respect to a supervised
3 loan made under section 508.1 of this chapter after June 30, 2022,
4 the term does not include the fees and charges set forth in section
5 508.1(2)(b) through section 508.1(2)(e) of this chapter. The term
6 does not include charges paid or payable to a third party that are not
7 required by the lender as a condition or incident to the extension of
8 credit except for borrower paid mortgage broker fees, including fees
9 paid directly to the broker or the lender (for delivery to the broker),
10 whether the fees are paid in cash or financed. However, borrower paid
11 mortgage broker fees do not include fees paid to a mortgage broker by
12 a creditor, including yield spread premiums and service release fees.
13 (2) If a lender makes a loan to a debtor by purchasing or satisfying
14 obligations of the debtor pursuant to a lender credit card or similar
15 arrangement, and the purchase or satisfaction is made at less than the
16 face amount of the obligation, the discount is not part of the loan
17 finance charge.
18 SECTION 2. IC 24-4.5-3-201, AS AMENDED BY P.L.85-2020,
19 SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
20 JULY 1, 2022]: Sec. 201. Loan Finance Charge for Consumer Loans
21 other than Supervised Loans—(1) Except as provided in subsections
22 (7) and (9), with respect to a consumer loan, other than a supervised
23 loan (as defined in section 501 of this chapter), a lender may contract
24 for a loan finance charge, calculated according to the actuarial method,
25 not exceeding the following:
26 (a) Twenty-five percent (25%) per year on the unpaid balances of
27 the principal (as defined in section 107(3) of this chapter), in the
28 case of a loan agreement entered into before July 1, 2022.
29 (b) Subject to subsection (3), thirty-six percent (36%) per year
30 on the unpaid balances of the principal (as defined in section
31 107(3) of this chapter), in the case of a loan agreement entered
32 into after June 30, 2022.
33 (2) In the case of a loan agreement entered into before July 1, 2020,
34 this section does not limit or restrict the manner of contracting for the
35 loan finance charge, whether by way of add-on, discount, or otherwise,
36 so long as the rate of the loan finance charge does not exceed that
37 permitted by this section. If the loan is precomputed:
38 (a) the loan finance charge may be calculated on the assumption
39 that all scheduled payments will be made when due; and
40 (b) the effect of prepayment is governed by the provisions on
41 rebate upon prepayment in section 210 of this chapter.
42 (3) The following apply to a loan agreement for a consumer loan (or
SB 352—LS 6946/DI 101 3
1 for the refinancing or consolidation of a consumer loan) that is entered
2 into after June 30, 2020:
3 (a) The consumer loan is subject to this section, including the
4 limitations set forth in:
5 (i) subsection (1) with respect to the loan finance charge; and
6 (ii) subsection (9)(b) with respect to the amount of the
7 authorized nonrefundable prepaid finance charge, in the case
8 of a consumer loan that is not secured by an interest in land.
9 (b) The loan finance charge authorized by this section must be:
10 (i) contracted for between the lender and the debtor; and
11 (ii) calculated by applying a rate not exceeding the rate set
12 forth in subsection (1) to unpaid balances of the principal (as
13 defined in section 107(3) of this chapter).
14 (c) A loan agreement for a precomputed consumer loan is
15 prohibited.
16 (d) Subject to subsection (12), in addition to the loan finance
17 charge authorized by subsection (1) and to any other fees
18 permitted by this chapter, and not subject to the twenty-five
19 percent (25%) applicable rate set forth in subsection (1), the
20 lender may contract for and receive as a condition for, or an
21 incident to, the extension of credit a nonrefundable prepaid
22 finance charge under subsection (9), whether the charge is:
23 (i) paid separately in cash or by check before or at
24 consummation; or
25 (ii) withheld from the proceeds of the consumer loan.
26 (4) For the purposes of this section, the term of a loan commences
27 with the date the loan is made. Differences in the lengths of months are
28 disregarded, and a day may be counted as one-thirtieth (1/30) of a
29 month. Subject to classifications and differentiations the lender may
30 reasonably establish, a part of a month in excess of fifteen (15) days
31 may be treated as a full month if periods of fifteen (15) days or less are
32 disregarded and if that procedure is not consistently used to obtain a
33 greater yield than would otherwise be permitted. For purposes of
34 computing average daily balances, the creditor may elect to treat all
35 months as consisting of thirty (30) days.
36 (5) With respect to a consumer loan made pursuant to a revolving
37 loan account:
38 (a) the loan finance charge shall be deemed not to exceed the
39 maximum annual percentage rate if the loan finance charge
40 contracted for and received does not exceed a charge in each
41 monthly billing cycle which is either two and eighty-three
42 thousandths percent (2.083%), in the case of a loan agreement
SB 352—LS 6946/DI 101 4
1 described in subsection (1)(a), or three percent (3%), in the
2 case of a loan agreement described in subsection (1)(b), of an
3 amount not greater than:
4 (i) the average daily balance of the debt;
5 (ii) the unpaid balance of the debt on the same day of the
6 billing cycle; or
7 (iii) subject to subsection (6), the median amount within a
8 specified range within which the average daily balance or the
9 unpaid balance of the debt, on the same day of the billing
10 cycle, is included; for the purposes of this clause and clause
11 (ii), a variation of not more than four (4) days from month to
12 month is "the same day of the billing cycle";
13 (b) if the billing cycle is not monthly, the loan finance charge
14 shall be deemed not to exceed the maximum annual percentage
15 rate if the loan finance charge contracted for and received does
16 not exceed a percentage which bears the same relation to
17 one-twelfth (1/12) the maximum annual percentage rate as the
18 number of days in the billing cycle bears to thirty (30); and
19 (c) notwithstanding subsection (1), if there is an unpaid balance
20 on the date as of which the loan finance charge is applied, the
21 lender may contract for and receive a charge not exceeding fifty
22 cents ($0.50) if the billing cycle is monthly or longer, or the pro
23 rata part of fifty cents ($0.50) which bears the same relation to
24 fifty cents ($0.50) as the number of days in the billing cycle bears
25 to thirty (30) if the billing cycle is shorter than monthly, but no
26 charge may be made pursuant to this subdivision if the lender has
27 made an annual charge for the same period as permitted by the
28 provisions on additional charges in section 202(1)(c) of this
29 chapter.
30 (6) Subject to classifications and differentiations the lender may
31 reasonably establish, the lender may make the same loan finance
32 charge on all amounts financed within a specified range. A loan finance
33 charge does not violate subsection (1) if:
34 (a) when applied to the median amount within each range, it does
35 not exceed the maximum permitted by subsection (1); and
36 (b) when applied to the lowest amount within each range, it does
37 not produce a rate of loan finance charge exceeding the rate
38 calculated according to subdivision (a) by more than eight percent
39 (8%) of the rate calculated according to subdivision (a).
40 (7) With respect to a consumer loan not made pursuant to a
41 revolving loan account, the lender may contract for and receive a
42 minimum loan finance charge of not more than thirty dollars ($30). The
SB 352—LS 6946/DI 101 5
1 minimum loan finance charge allowed under this subsection may be
2 imposed only if the lender does not contract for or receive a
3 nonrefundable prepaid finance charge under subsection (9) and:
4 (a) the debtor prepays in full a consumer loan, refinancing, or
5 consolidation, regardless of whether the loan, refinancing, or
6 consolidation is precomputed;
7 (b) the loan, refinancing, or consolidation prepaid by the debtor
8 is subject to a loan finance charge that:
9 (i) is contracted for by the parties; and
10 (ii) does not exceed the rate prescribed in subsection (1); and
11 (c) the loan finance charge earned at the time of prepayment is
12 less than the minimum loan finance charge contracted for under
13 this subsection.
14 (8) The amount of thirty dollars ($30) in subsection (7) is subject to
15 change under the provisions on adjustment of dollar amounts
16 (IC 24-4.5-1-106). However, notwithstanding IC 24-4.5-1-106(1), the
17 Reference Base Index to be used under this subsection is the Index for
18 October 1992.
19 (9) Except as provided in subsection (7), and subject to subsection
20 (12), in addition to the loan finance charge authorized by subsection (1)
21 and to any other charges and fees permitted by this chapter, a lender
22 may contract for and receive a nonrefundable prepaid finance charge
23 of not more than the following:
24 (a) In the case of a consumer loan that is secured by an interest in
25 land and that:
26 (i) is not made under a revolving loan account, two percent
27 (2%) of the loan amount; or
28 (ii) is made under a revolving loan account, two percent (2%)
29 of the line of credit.
30 (b) In the case of consumer loan that is not secured by an interest
31 in land, fifty dollars ($50) if the loan agreement is entered into
32 before July 1, 2020. If the loan agreement is entered into after
33 June 30, 2020, not more than the following:
34 (i) Seventy-five dollars ($75), in the case of a loan agreement
35 for a principal amount which is two thousand dollars ($2,000)
36 or less.
37 (ii) One hundred fifty dollars ($150) in the case of a loan
38 agreement for a principal amount which is more than two
39 thousand dollars ($2,000) but does not exceed four thousand
40 dollars ($4,000).
41 (iii) Two hundred dollars ($200) in the case of a loan
42 agreement for a principal amount which is more than four
SB 352—LS 6946/DI 101 6
1 thousand dollars ($4,000).
2 The amounts in this subsection are not subject to change under
3 IC 24-4.5-1-106.
4 (10) The nonrefundable prepaid finance charge provided for in
5 subsection (9) is not subject to refund or rebate. However, for any loan
6 entered into after June 30, 2020, any amount charged by the lender,
7 other than by a lender that is a depository institution (as defined in
8 IC 24-4.5-1-301.5(12)), under subsection (9) that exceeds the
9 applicable amount permitted by subsection (9)(b) constitutes a
10 violation of this article under IC 24-4.5-6-107.5(l) and is subject to
11 refund. Any amount charged by a depository institution (as defined in
12 IC 24-4.5-1-301.5(12)) under subsection (9) that exceeds the applicable
13 amount set forth in subsection (9)(b) is subject to refund.
14 (11) If the director determines that a lender's accrual method of
15 accounting as applied to a consumer loan under this section involves
16 the application of subterfuge for the purpose of circumventing this
17 chapter, the director may conform the loan finance charge and fees for
18 the transaction to the limitations set forth in this section and may
19 require a refund of overcharges under IC 24-4.5-6-106(2)(a). A
20 determination by the director under this subsection:
21 (a) must be in writing;
22 (b) shall be delivered to all parties in the transaction; and
23 (c) is subject to IC 4-21.5-3.
24 (12) At the time of consummation of a consumer loan:
25 (a) the loan finance charge authorized by subsection (1); and
26 (b) the nonrefundable prepaid finance charge authorized by
27 subsection (9) (including any amount charged by a depository
28 institution (as defined in IC 24-4.5-1-301.5(12)) that exceeds the
29 applicable amount set forth in subsection (9)(b));
30 are subject to IC 35-45-7 and, when combined, may not exceed the rate
31 set forth in IC 35-45-7-2.
32 (13) Notwithstanding subsections (9) and (10), in the case of a
33 consumer loan that is not secured by an interest in land, if a lender
34 retains any part of a nonrefundable prepaid finance charge charged on
35 a loan that is paid in full by a new loan from the same lender, the
36 following apply:
37 (a) If the loan is paid in full by the new loan within three (3)
38 months after the date of the prior loan, the lender may not charge
39 a nonrefundable prepaid finance charge on the new loan, or, in the
40 case of a revolving loan, on the increased credit line.
41 (b) The lender may not assess more than two (2) nonrefundable
42 prepaid finance charges in any twelve (12) month period.
SB 352—LS 6946/DI 101 7
1 (c) Subject to subdivisions (a) and (b), if a loan that is entered
2 into by a lender and a debtor before July 1, 2020, is paid in full by
3 a new loan from the same lender after June 30, 2020, the lender
4 may contract for and receive a nonrefundable prepaid finance
5 charge in the amount set forth in subsection (9)(b) for loan
6 agreements entered into after June 30, 2020.
7 (14) In the case of a consumer loan that is secured by an interest in
8 land, this section does not prohibit a lender from contracting for and
9 receiving a fee for preparing deeds, mortgages, reconveyances, and
10 similar documents under section 202(1)(d)(ii) of this chapter, in
11 addition to the nonrefundable prepaid finance charge provided for in
12 subsection (9).
13 SECTION 3. IC 24-4.5-3-205, AS AMENDED BY P.L.85-2020,
14 SECTION 12, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
15 JULY 1, 2022]: Sec. 205. Loan Finance Charge on Refinancing —
16 With respect to a consumer loan, refinancing, or consolidation, the
17 lender may by agreement with the debtor refinance the unpaid balance
18 and may contract for and receive a loan finance charge based on the
19 principal resulting from the refinancing at a rate not exceeding that
20 permitted by the provisions on a loan finance charge for consumer
21 loans (IC 24-4.5-3-201) or the provisions on a loan finance charge for
22 supervised loans (IC 24-4.5-3-508), (section 508 of this chapter, for
23 supervised loans made before July 1, 2022, or section 508.1 of this
24 chapter, for supervised loans made after June 30, 2022), whichever
25 is appropriate. For the purpose of determining the loan finance charge
26 permitted, the principal resulting from the refinancing comprises the
27 following:
28 (a) If:
29 (i) the transaction was not precomputed, the total of the unpaid
30 balance and the accrued charges on the date of the refinancing;
31 or
32 (ii) the transaction was precomputed in the case of a
33 transaction and was entered into before July 1, 2020, the
34 amount which the debtor would have been required to pay
35 upon prepayment pursuant to the provisions on rebate upon
36 prepayment (IC 24-4.5-3-210) (section 210 of this chapter)
37 on the date of refinancing.
38 (b) Appropriate additional charges (IC 24-4.5-3-202), payment of
39 which is deferred.
40 SECTION 4. IC 24-4.5-3-206, AS AMENDED BY P.L.85-2020,
41 SECTION 13, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
42 JULY 1, 2022]: Sec. 206. Loan Finance Charge on Consolidation —
SB 352—LS 6946/DI 101 8
1 (1) If a debtor owes an unpaid balance to a lender with respect to a
2 consumer loan, refinancing, or consolidation, and becomes obligated
3 on another consumer loan, refinancing, or consolidation with the same
4 lender, the parties may agree to a consolidation resulting in a single
5 schedule of payments. If the previous consumer loan, refinancing, or
6 consolidation was not precomputed, the parties may agree to add the
7 unpaid amount of principal and accrued charges on the date of
8 consolidation to the principal with respect to the subsequent loan. If the
9 previous consumer loan, refinancing, or consolidation was
10 precomputed in the case of a transaction and was entered into before
11 July 1, 2020, or if the previous transaction was made under section
12 508.1 of this chapter after June 30, 2022, the parties may agree to
13 refinance the unpaid balance pursuant to the provisions on refinancing
14 (IC 24-4.5-3-205) and to consolidate the principal resulting from the
15 refinancing by adding it to the principal with respect to the subsequent
16 loan. In either case the lender may contract for and receive a loan
17 finance charge based on the aggregate principal resulting from the
18 consolidation at a rate not in excess of that permitted by the provisions
19 on loan finance charge for consumer loans (IC 24-4.5-3-201) or the
20 provisions on loan finance charge for supervised loans
21 (IC 24-4.5-3-508), (section 508 of this chapter, for supervised loans
22 made before July 1, 2022, or section 508.1 of this chapter, for
23 supervised loans made after June 30, 2022), whichever is
24 appropriate.
25 (2) The parties may agree to consolidate the unpaid balance of a
26 consumer loan with the unpaid balance of a consumer credit sale. The
27 parties may agree to refinance the previous unpaid balance pursuant to
28 the provisions on refinancing sales (IC 24-4.5-2-205) or the provisions
29 on refinancing loans (IC 24-4.5-3-205), whichever is appropriate, and
30 to consolidate the amount financed resulting from the refinancing or
31 the principal resulting from the refinancing by adding it to the amount
32 financed or principal with respect to the subsequent sale or loan. The
33 aggregate amount resulting from the consolidation shall be deemed
34 principal, and the creditor may contract for and receive a loan finance
35 charge based on the principal at a rate not in excess of that permitted
36 by the provisions on loan finance charge for consumer loans
37 (IC 24-4.5-3-201) or the provisions on loan finance charge for
38 supervised loans (IC 24-4.5-3-508), (section 508 of this chapter, for
39 supervised loans made before July 1, 2022, or section 508.1 of this
40 chapter, for supervised loans made after June 30, 2022), whichever
41 is appropriate.
42 SECTION 5. IC 24-4.5-3-208 IS AMENDED TO READ AS
SB 352—LS 6946/DI 101 9
1 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 208. Advances to
2 Perform Covenants of Debtor. — (1) This section does not apply to
3 a supervised loan made after June 30, 2022, under section 508.1 of
4 this chapter. If the agreement with respect to a consumer loan,
5 refinancing, or consolidation contains covenants by the debtor to
6 perform certain duties pertaining to insuring or preserving collateral
7 and if the lender pursuant to the agreement pays for performance of the
8 duties on behalf of the debtor, the lender may add the amounts paid to
9 the debt. Within a reasonable time after advancing any sums, he the
10 lender shall state to the debtor in writing the amount of the sums
11 advanced, any charges with respect to this amount, and any revised
12 payment schedule and, if the duties of the debtor performed by the
13 lender pertain to insurance, a brief description of the insurance paid for
14 by the lender including the type and amount of coverages. No further
15 information need be given.
16 (2) A loan finance charge may be made for sums advanced pursuant
17 to subsection (1) at a rate not exceeding the rate stated to the debtor
18 pursuant to the provisions on disclosure (Part 3) with respect to the
19 loan, refinancing, or consolidation, except that with respect to a
20 revolving loan account the amount of the advance may be added to the
21 unpaid balance of the debt and the lender may make a loan finance
22 charge not exceeding that permitted by the provisions on loan finance
23 charge for consumer loans (24-4.5-3-201) (section 201 of this
24 chapter) or for supervised loans (24-4.5-3-508), (section 508 of this
25 chapter), whichever is appropriate.
26 SECTION 6. IC 24-4.5-3-501, AS AMENDED BY P.L.91-2013,
27 SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
28 JULY 1, 2022]: Sec. 501. Definitions:
29 (1) "Supervised loan" means a consumer loan:
30 (a) in which the rate of the loan finance charge exceeds
31 twenty-five percent (25%) per year as determined according to the
32 provisions on loan finance charge for consumer loans in section
33 201 of this chapter, in the case of a loan entered into before
34 July 1, 2022; or
35 (b) that is made in accordance with section 508.1 of this
36 chapter, in the case of a loan entered into after June 30, 2022.
37 (2) "Supervised lender" means a person authorized to make or take
38 assignments of supervised loans.
39 SECTION 7. IC 24-4.5-3-508, AS AMENDED BY P.L.85-2020,
40 SECTION 16, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
41 JULY 1, 2022]: Sec. 508. Loan Finance Charge for Supervised Loans
42 ) (1) This section applies only to a supervised loan entered into
SB 352—LS 6946/DI 101 10
1 before July 1, 2022. With respect to a supervised loan, including a
2 loan pursuant to a revolving loan account, a supervised lender may
3 contract for and receive a loan finance charge not exceeding that
4 permitted by this section.
5 (2) The loan finance charge, calculated according to the actuarial
6 method, may not exceed the equivalent of the greater of:
7 (a) the total of:
8 (i) thirty-six percent (36%) per year on that part of the unpaid
9 balances of the principal (as defined in section 107(3) of this
10 chapter) which is two thousand dollars ($2,000) or less;
11 (ii) twenty-one percent (21%) per year on that part of the
12 unpaid balances of the principal (as defined in section 107(3)
13 of this chapter) which is more than two thousand dollars
14 ($2,000) but does not exceed four thousand dollars ($4,000);
15 and
16 (iii) fifteen percent (15%) per year on that part of the unpaid
17 balances of the principal (as defined in section 107(3) of this
18 chapter) which is more than four thousand dollars ($4,000); or
19 (b) twenty-five percent (25%) per year on the unpaid balances of
20 the principal (as defined in section 107(3) of this chapter).
21 (3) In the case of a loan agreement entered into before July 1, 2020,
22 this section does not limit or restrict the manner of contracting for the
23 loan finance charge, whether by way of add-on, discount, or otherwise,
24 so long as the rate of the loan finance charge does not exceed that
25 permitted by this section. If the loan is precomputed:
26 (a) the loan finance charge may be calculated on the assumption
27 that all scheduled payments will be made when due; and
28 (b) the effect of prepayment is governed by the provisions on
29 rebate upon prepayment in section 210 of this chapter.
30 After June 30, 2020, and before July 1, 2022, a loan agreement may
31 not be entered into for a precomputed supervised loan.
32 (4) The term of a loan for the purposes of this section commences
33 on the date the loan is made. Differences in the lengths of months are
34 disregarded, and a day may be counted as one-thirtieth (1/30) of a
35 month. Subject to classifications and differentiations the lender may
36 reasonably establish, a part of a month in excess of fifteen (15) days
37 may be treated as a full month if periods of fifteen (15) days or less are
38 disregarded and that procedure is not consistently used to obtain a
39 greater yield than would otherwise be permitted.
40 (5) Subject to classifications and differentiations the lender may
41 reasonably establish, the lender may make the same loan finance
42 charge on all principal amounts within a specified range. A loan
SB 352—LS 6946/DI 101 11
1 finance charge does not violate subsection (2) if:
2 (a) when applied to the median amount within each range, it does
3 not exceed the maximum permitted in subsection (2); and
4 (b) when applied to the lowest amount within each range, it does
5 not produce a rate of loan finance charge exceeding the rate
6 calculated according to subdivision (a) by more than eight percent
7 (8%) of the rate calculated according to subdivision (a).
8 (6) The amounts of two thousand dollars ($2,000) and four thousand
9 dollars ($4,000) in subsection (2) and thirty dollars ($30) in subsection
10 (7) are subject to change pursuant to the provisions on adjustment of
11 dollar amounts (IC 24-4.5-1-106). However, notwithstanding
12 IC 24-4.5-1-106(1), for the adjustment of the amount of thirty dollars
13 ($30), the Reference Base Index to be used is the Index for October
14 1992. Notwithstanding IC 24-4.5-1-106(1), for the adjustment of the
15 amounts of two thousand dollars ($2,000) and four thousand dollars
16 ($4,000), the Reference Base Index to be used is the Index for October
17 2012.
18 (7) With respect to a supervised loan not made pursuant to a
19 revolving loan account, the lender may contract for and receive a
20 minimum loan finance charge of not more than thirty dollars ($30). The
21 minimum loan finance charge allowed under this subsection may be
22 imposed only if the lender does not assess a nonrefundable prepaid
23 finance charge under subsection (8) and:
24 (a) the debtor prepays in full a consumer loan, refinancing, or
25 consolidation, regardless of whether the loan, refinancing, or
26 consolidation is precomputed;
27 (b) the loan, refinancing, or consolidation prepaid by the debtor
28 is subject to a loan finance charge that:
29 (i) is contracted for by the parties; and
30 (ii) does not exceed the rate prescribed in subsection (2); and
31 (c) the loan finance charge earned at the time of prepayment is
32 less than the minimum loan finance charge contracted for under
33 this subsection.
34 (8) Except as provided in subsections (7) and (10)(c), in addition to
35 the loan finance charge provided for in this section and to any other
36 charges and fees permitted by this chapter, the lender may contract for
37 and receive a nonrefundable prepaid finance charge of not more than
38 fifty dollars ($50) if the loan agreement is entered into before July 1,
39 2020, and, if the loan agreement is entered into after June 30, 2020, not
40 more than the following:
41 (a) Seventy-five dollars ($75), in the case of a loan agreement for
42 a principal amount which is two thousand dollars ($2,000) or less.
SB 352—LS 6946/DI 101 12
1 (b) One hundred fifty dollars ($150) in the case of a loan
2 agreement for a principal amount which is more than two
3 thousand dollars ($2,000) but does not exceed four thousand
4 dollars ($4,000).
5 (c) Two hundred dollars ($200) in the case of a loan agreement
6 for a principal amount which is more than four thousand dollars
7 ($4,000).
8 The amounts in this subsection are not subject to change under
9 IC 24-4.5-1-106.
10 (9) The nonrefundable prepaid finance charge provided for in
11 subsection (8) is not subject to refund or rebate. However, for any
12 supervised loan entered into after June 30, 2020, any amount charged
13 by the lender, other than by a lender that is a depository institution (as
14 defined in IC 24-4.5-1-301.5(12)), under subsection (8) that exceeds
15 the applicable amount permitted by subsection (8) constitutes a
16 violation of this article under IC 24-4.5-6-107.5(l) and is subject to
17 refund. Any amount charged by a depository institution (as defined in
18 IC 24-4.5-1-301.5(12)) under subsection (8) that exceeds the applicable
19 amount set forth in subsection (8) is subject to refund.
20 (10) Notwithstanding subsections (8) and (9), in the case of a
21 supervised loan that is not secured by an interest in land, if a lender
22 retains any part of a nonrefundable prepaid finance charge charged on
23 a loan that is paid in full by a new loan from the same lender, the
24 following apply:
25 (a) If the loan is paid in full by the new loan within three (3)
26 months after the date of the prior loan, the lender may not charge
27 a nonrefundable prepaid finance charge on the new loan, or, in the
28 case of a revolving loan, on the increased credit line.
29 (b) The lender may not assess more than two (2) nonrefundable
30 prepaid finance charges in any twelve (12) month period.
31 (c) Subject to subdivisions (a) and (b), if a supervised loan that is
32 entered into by a lender and a debtor before July 1, 2020, is paid
33 in full by a new loan from the same lender after June 30, 2020, the
34 lender may contract for and receive a nonrefundable prepaid
35 finance charge in the amount set forth in subsection (8) for loan
36 agreements entered into after June 30, 2020.
37 (11) In the case of a supervised loan that is secured by an interest in
38 land, this section does not prohibit a lender from contracting for and
39 receiving a fee for preparing deeds, mortgages, reconveyances, and
40 similar documents under section 202(1)(d)(ii) of this chapter, in
41 addition to the nonrefundable prepaid finance charge provided for in
42 subsection (8).
SB 352—LS 6946/DI 101 13
1 SECTION 8. IC 24-4.5-3-508.1 IS ADDED TO THE INDIANA
2 CODE AS A NEW SECTION TO READ AS FOLLOWS
3 [EFFECTIVE JULY 1, 2022]: Sec. 508.1. (1) This section applies to
4 a supervised loan entered into after June 30, 2022.
5 (2) Subject to subsections (5) and (6), with respect to a
6 supervised loan, other than a loan pursuant to a revolving loan
7 account, a supervised lender may contract for and receive the
8 following if the supervised loan meets all requirements set forth in
9 this section:
10 (a) A loan finance charge, calculated according to the
11 actuarial method, not exceeding thirty-six percent (36%) per
12 year on the unpaid balances of the principal (as defined in
13 section 107(3) of this chapter). The loan finance charge does
14 not include the fees and charges set forth in subdivisions (b)
15 through (e).
16 (b) A monthly maintenance fee that does not exceed thirteen
17 percent (13%) of the principal amount originally contracted
18 for, as long as the fee is not added to the unpaid balances of
19 the principal (as defined in section 107(3) of this chapter) that
20 are subject to the loan finance charge under subdivision (a).
21 (c) Delinquency charges permitted under section 203.5 of this
22 chapter.
23 (d) Charges permitted under section 202(1)(f) of this chapter
24 for returned payments of dishonored checks, electronic funds
25 transfers, negotiable orders of withdrawal, or share drafts
26 issued by the borrower.
27 (e) If the principal amount originally contracted for is at least
28 four hundred dollars ($400), an underwriting fee not to exceed
29 fifty dollars ($50).
30 No other charges are permitted in connection with a supervised
31 loan, including any charges for cashing the loan proceeds if the
32 proceeds are given in check form.
33 (3) A supervised loan made in compliance with this section is
34 exempt from IC 35-45-7.
35 (4) The principal amount of a supervised loan may not exceed
36 two thousand five hundred dollars ($2,500). The amount of two
37 thousand five hundred dollars ($2,500) in this subdivision is subject
38 to change under IC 24-4.5-1-106.
39 (5) Notwithstanding any other law, a lender may not contract
40 for, charge, collect, or receive in connection with a supervised loan
41 made under this section a total amount of fees and charges over the
42 life of the loan, as disclosed in accordance with subsection 10(a),
SB 352—LS 6946/DI 101 14
1 that exceeds:
2 (a) seventy-five percent (75%) of the principal amount
3 originally contracted for, if the principal amount originally
4 contracted for is one thousand five hundred dollars ($1,500)
5 or less; or
6 (b) one hundred percent (100%) of the principal amount
7 originally contracted for, if the principal amount originally
8 contracted for is greater than one thousand five hundred
9 dollars ($1,500).
10 All fees and charges imposed in connection with the loan must be
11 included in the calculation of the total amount of fees and charges
12 under this subsection, except for delinquency charges described in
13 subsection (2)(c) and charges for returned payments described in
14 subsection (2)(d).
15 (6) A supervised loan made under this section must be an
16 interest bearing loan payable in substantially equal installments
17 consisting of:
18 (a) principal;
19 (b) the loan finance charge permitted under subsection (2)(a);
20 and
21 (c) other permitted fees and charges under subsection (2);
22 combined.
23 (7) A supervised loan may not be made for a term of:
24 (a) less than three (3) calendar months; or
25 (b) more than twenty-four (24) calendar months.
26 (8) Before making a supervised loan under this section, the
27 lender shall make a reasonable attempt to verify the borrower's:
28 (a) gross monthly income, exclusive of any income other than
29 gross pay received; or
30 (b) monthly funds actually received, net of taxes and other
31 deductions;
32 including, at a minimum, obtaining from the borrower at least one
33 (1) recent pay stub or other written evidence of the borrower's
34 gross monthly income or net monthly funds received (as described
35 in subdivisions (a) and (b), respectively), such as a bank statement.
36 For purposes of this subsection, verification of a borrower's gross
37 monthly income or net monthly funds received must include the
38 lender's receipt of at least one (1) document that, when presented
39 to the lender, is dated not earlier than ninety (90) days before the
40 borrower's initiation of the loan transaction and not later than the
41 time the loan is made.
42 (9) A supervised lender may not have more than one (1)
SB 352—LS 6946/DI 101 15
1 supervised loan made under this section outstanding to the same
2 borrower at any time. A supervised lender shall maintain a record
3 of loan transactions for each borrower with whom the supervised
4 lender has entered into a supervised loan transaction. A record
5 required by this subsection must include at least the following
6 information:
7 (a) The name, address, and telephone number of the
8 borrower.
9 (b) The date each payment is made under the loan and the due
10 date of the payment.
11 (10) A supervised loan made under this section must be entered
12 into under a written contract that sets forth the terms and
13 conditions of the loan. The lender shall provide a copy of the loan
14 contract to the borrower upon consummation of the loan
15 transaction. The loan contract must disclose in a clear and concise
16 manner the following:
17 (a) The total amount of fees and charges the borrower will be
18 required to pay under the loan contract.
19 (b) The total amount of each payment, the due date for each
20 payment, and the total number of payments the borrower will
21 be required to make under the loan contract.
22 (c) The annual percentage rate, inclusive of monthly fees.
23 (d) The following notices in at least 10 point bold face type:
24 (i) "NOTICE TO THE BORROWER: This is a supervised
25 loan made under IC 24-4.5-3-508.1, which allows lenders
26 to charge higher than average rates if they follow certain
27 consumer protection rules. INDIANA LAW PROHIBITS
28 THIS LENDER AND ITS AFFILIATES FROM HAVING
29 MORE THAN ONE SUCH LOAN OUTSTANDING TO
30 YOU AT ANY TIME. A LENDER MAY NOT DIVIDE
31 THE AMOUNT YOU BORROW INTO MULTIPLE
32 LOANS.".
33 (ii) "You have the right to rescind this loan by returning
34 the principal amount originally contracted for to the
35 lender not later than the end of the business day
36 immediately following the day on which the borrower
37 receives the proceeds.".
38 (iii) "Electronic payment of amounts due under this
39 contract is optional. You have the right to revoke or
40 remove your authorization for electronic payment at any
41 time.".
42 Before consummation of the loan transaction, the lender must
SB 352—LS 6946/DI 101 16
1 obtain the borrower's signature or initials next to each notice
2 required under this subdivision.
3 (11) When a borrower enters into a supervised loan under this
4 section, the lender shall provide the borrower with a pamphlet
5 approved by the department that describes:
6 (a) the availability of debt management and credit counseling
7 services;
8 (b) the borrower's rights and responsibilities in the
9 transaction; and
10 (c) the availability of the 211 telephone dialing code for access
11 to human services information and referrals, including
12 information on and referrals to governmental or nonprofit
13 organizations that assist persons in paying for housing costs,
14 utility bills, and food.
15 (12) A borrower may rescind, without penalty, a supervised loan
16 transaction made under this section by returning to the lender the
17 cash amount of the principal originally contracted for not later
18 than the end of the business day immediately following the day on
19 which the borrower receives the proceeds. Upon receipt of the
20 borrower's notice and the cash amount of the principal under this
21 subsection, the lender shall return to the borrower any fees and
22 charges collected by the lender in connection with the loan.
23 (13) A supervised lender shall not fail or refuse to accept cash
24 or other good funds from the borrower, or from a third party on
25 behalf of the borrower, for full or partial repayment of a
26 supervised loan under this section. For purposes of this subsection,
27 "good funds" includes:
28 (a) a certified check;
29 (b) a cashier's check;
30 (c) a bank check; or
31 (d) any other negotiable instrument;
32 with respect to which payment cannot be stopped by the paying
33 party.
34 (14) The proceeds of a supervised loan made under this section
35 may not be applied to any other loan made to the same borrower
36 by the lender or by an affiliate of the lender. However, a lender or
37 an affiliate of the lender may refinance a supervised loan made to
38 a borrower under this section if the refinanced loan is also a
39 supervised loan made under this section.
40 (15) With respect to a supervised loan transaction in which cash
41 is advanced to the borrower in exchange for a personal check of
42 the borrower, the lender may not accept a check dated earlier than
SB 352—LS 6946/DI 101 17
1 the date of the first required loan payment as set forth in the loan
2 contract. Upon receipt of the check from the borrower, the lender
3 shall immediately stamp the back of the check with an
4 endorsement that states the following:
5 "Negotiated as part of a loan made under IC 24-4.5-3-508.1.
6 Holder takes this check subject to the claims and defenses of
7 the maker.".
8 A supervised loan described in this subsection is not considered a
9 small loan subject to IC 24-4.5-7 if the supervised loan otherwise
10 complies with this section.
11 (16) A person shall not commit or cause to be committed any of
12 the following acts or practices in connection with a supervised loan
13 under this section:
14 (a) Using any device or agreement that would have the effect
15 of charging or collecting more fees, charges, or interest than
16 allowed by this section, including:
17 (i) entering into a different type of transaction with the
18 borrower;
19 (ii) entering into a sales/leaseback or rebate arrangement;
20 (iii) making catalog sales; or
21 (iv) entering into any other transaction with the borrower
22 or with any other person if the transaction is designed to
23 evade the applicability of this section.
24 (b) Including any of the following provisions in the loan
25 contract or in any loan document:
26 (i) A hold harmless clause.
27 (ii) A confession of judgment clause.
28 (iii) A provision in which the borrower agrees not to assert
29 a claim or defense arising out of the loan contract.
30 (iv) A provision by which a person acting on behalf of the
31 lender is treated as an agent of the borrower in connection
32 with the supervised loan.
33 (c) Accepting real or personal property, or any interest in
34 property, in connection with the loan other than a check, as
35 described in subsection (15).
36 (d) Drafting funds electronically from a borrower's account
37 without the borrower's express written authorization.
38 (e) Failing to stop attempts to draft funds electronically from
39 a borrower's account upon request from the borrower or the
40 borrower's agent.
41 (f) Attempting to draft funds electronically from a borrower's
42 account after three (3) consecutive attempts have failed,
SB 352—LS 6946/DI 101 18
1 unless the lender obtains new written authorization from the
2 borrower to transfer or withdraw funds electronically from
3 the borrower's account.
4 This subsection does not prohibit the conversion of a negotiable
5 instrument into an electronic form for processing through the
6 automated clearing house system.
7 (17) In applying the provisions of this article on
8 unconscionability (IC 24-4.5-5-108 and IC 24-4.5-6-111) to a
9 supervised loan transaction made under this section, consideration
10 shall be given, among other factors, to the following:
11 (a) The ability of the borrower to repay the supervised loan
12 within the terms of the loan made under this section.
13 (b) Whether the borrower's original request as to the amount
14 and terms of the loan were within the limitations set forth in
15 this section.
16 (18) A lender that makes at least one (1) supervised loan under
17 this chapter in Indiana during a calendar year shall remit the
18 following to the department at the time of license renewal under
19 section 503.6 of this chapter, if the lender is required to be licensed
20 under section 502 of this chapter:
21 (a) An annual fee, paid separately from the required renewal
22 fee (if applicable), in the amount of two hundred fifty dollars
23 ($250).
24 (b) An additional two hundred fifty dollars ($250) per branch
25 location in Indiana from which the lender makes supervised
26 loans under this section, after the lender's first Indiana
27 location from which the lender makes supervised loans under
28 this chapter.
29 All amounts collected by the department under this subsection
30 shall be held in the consumer financial education fund established
31 by subsection (19) and shall be used exclusively, in the
32 department's discretion, for providing or supporting financial
33 education programs for the benefit of Indiana consumers. A lender
34 may not pass any part of the amounts required by this subsection
35 onto borrowers by imposing an additional charge in connection
36 with any supervised loan, or through any charge or fee authorized
37 under subsection (2).
38 (19) The consumer financial education fund is established for
39 the purpose of paying expenses incurred by the department in
40 administering subsection (18), and for paying all expenses incurred
41 and all compensation paid by the department relating to consumer
42 financial education. The following apply with respect to the fund:
SB 352—LS 6946/DI 101 19
1 (a) The department shall administer the fund.
2 (b) The fund consists of:
3 (i) money deposited in the fund under subsection (18); and
4 (ii) donations, gifts, and money received from any other
5 source.
6 (c) The expenses of administering the fund shall be paid from
7 money in the fund.
8 (d) The treasurer of state shall invest the money in the fund
9 not currently needed to meet the obligations of the fund in the
10 same manner as other public money may be invested. Interest
11 that accrues from these investments shall be deposited in the
12 fund.
13 (e) Money in the fund at the end of a state fiscal year does not
14 revert to the state general fund.
15 (f) Money in the fund is appropriated for the purpose set forth
16 in this subsection.
17 (20) Except for a person described in section 502(1) of this
18 chapter, a person that enters into at least one (1) supervised loan
19 transaction under this section in Indiana in any calendar year,
20 shall file with the department, at such time and in such manner as
21 the director may prescribe, a report concerning the person's
22 business and operations with respect to that calendar year. The
23 director shall prescribe the information to be included in the
24 report so as to enable the director to produce the analysis required
25 by subsection (21). The department may adopt rules under
26 IC 4-22-2 to implement this subsection, including emergency rules
27 in the manner provided under IC 4-22-2-37.1. Notwithstanding
28 IC 4-22-2-37.1(g), an emergency rule adopted by the department
29 under this subsection and in the manner provided under
30 IC 4-22-2-37.1 expires on the date on which a rule that supersedes
31 the emergency rule is adopted by the department under
32 IC 4-22-2-24 through IC 4-22-2-36.
33 (21) The director shall publish and make available to the public,
34 at least annually, an analysis of the information provided to the
35 department under subsection (20). The analysis must include the
36 following information with respect to the most recent calendar
37 year:
38 (a) The total number of supervised loan transactions entered
39 into.
40 (b) The total number of borrowers obligated under the loans
41 reported under subdivision (a).
42 (c) The average principal amount of the loans.
SB 352—LS 6946/DI 101 20
1 (d) The average contracted annual percentage rate of the
2 loans.
3 (e) The total amount of contracted finance charges under the
4 loans.
5 (f) The total amount of maintenance fees collected on the
6 loans.
7 (g) The total amount of contractual underwriting fees on the
8 loans.
9 (h) The number of loans on which borrowers defaulted.
10 (i) The total number and total dollar value of charged off
11 loans. For purposes of this subdivision, "charged off loan"
12 means a loan with respect to which the lender has stopped
13 pursuing first party collection efforts.
14 (j) The total number and total dollar value of delinquency
15 charges (as authorized by subsection (2)(c)) incurred by
16 borrowers.
17 SECTION 9. IC 24-4.5-3-509 IS AMENDED TO READ AS
18 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 509. Use of Multiple
19 Agreements. — With respect to a consumer loan, no lender may permit
20 any person, or husband and wife, to become obligated in any way under
21 more than one loan agreement with the lender or with a person related
22 to the lender, with intent to obtain a higher rate of loan finance charge
23 than would otherwise be permitted by the provisions on loan finance
24 charge for supervised loans (IC 24-4.5-3-508) (section 508 of this
25 chapter, for supervised loans made before July 1, 2022, or section
26 508.1 of this chapter, for supervised loans made after June 30,
27 2022), or to avoid disclosure of an annual percentage rate pursuant to
28 the provisions on disclosure (Part 3). The excess amount of loan
29 finance charge provided for in agreements in violation of this section
30 is an excess charge for the purposes of the provisions on effect of
31 violations on rights of parties (IC 24-4.5-5-202) and the provisions on
32 civil actions by the department (IC 24-4.5-6-113).
33 SECTION 10. IC 24-4.5-3-510, AS AMENDED BY P.L.186-2015,
34 SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
35 JULY 1, 2022]: Sec. 510. Restrictions on Interest in Land as Security
36 — (1) With respect to a supervised loan in that is made before July
37 1, 2022, and with respect to which the principal is four thousand
38 dollars ($4,000) or less, a lender may not contract for an interest in land
39 as security. With respect to a supervised loan that is made under
40 section 508.1 of this chapter after June 30, 2022, a lender may not
41 contract for an interest of land as security, as set forth in section
42 508.1(15)(c). A security interest taken in violation of this section is
SB 352—LS 6946/DI 101 21
1 void.
2 (2) The amount of four thousand dollars ($4,000) in subsection (1)
3 is subject to change pursuant to the provisions on adjustment of dollar
4 amounts (IC 24-4.5-1-106). However, notwithstanding
5 IC 24-4.5-1-106(1), the Reference Base Index to be used under this
6 subsection is the Index for October 2012.
7 SECTION 11. IC 24-4.5-3-511, AS AMENDED BY P.L.10-2019,
8 SECTION 107, IS AMENDED TO READ AS FOLLOWS
9 [EFFECTIVE JULY 1, 2022]: Sec. 511. Regular Schedule of
10 Payments; Maximum Loan Term — (1) This section applies only to
11 a supervised loan that is made before July 1, 2022. Supervised loans
12 not made pursuant to a revolving loan account and in which the
13 principal is four thousand dollars ($4,000) or less are payable in a
14 single instalment or shall be scheduled to be payable in substantially
15 equal instalments that are payable at equal periodic intervals, except to
16 the extent that the schedule of payments is adjusted to the seasonal or
17 irregular income of the debtor, and:
18 (a) over a period of not more than thirty-seven (37) months if the
19 principal is more than three hundred dollars ($300); or
20 (b) over a period of not more than twenty-five (25) months if the
21 principal is three hundred dollars ($300) or less.
22 (2) The amounts of three hundred dollars ($300) and four thousand
23 dollars ($4,000) in subsection (1) are subject to change pursuant to the
24 provisions on adjustment of dollar amounts (IC 24-4.5-1-106).
25 However, notwithstanding IC 24-4.5-1-106(1), the Reference Base
26 Index to be used with respect to the amount of:
27 (a) three hundred dollars ($300) is the Index for October 1992;
28 and
29 (b) four thousand dollars ($4,000) is the Index for October 2012.
30 SECTION 12. IC 24-4.5-4-107, AS AMENDED BY P.L.85-2020,
31 SECTION 17, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
32 JULY 1, 2022]: Sec. 107. Maximum Charge by Creditor for Insurance
33 - (1) This section does not apply to a supervised loan that is made
34 under IC 24-4.5-3-508.1 after June 30, 2022. Except as provided in
35 subsection (2), if a creditor contracts for or receives a separate charge
36 for insurance, the amount charged to the debtor for the insurance may
37 not exceed the premium to be charged by the insurer, as computed at
38 the time the charge to the debtor is determined, conforming to any rate
39 filings required by law and made by the insurer with the insurance
40 commissioner.
41 (2) A creditor who provides consumer credit insurance in relation
42 to a revolving charge account (as defined in IC 24-4.5-2-108) or
SB 352—LS 6946/DI 101 22
1 revolving loan account (as defined in IC 24-4.5-3-108) may calculate
2 the charge to the debtor in each billing cycle by applying the current
3 premium rate to one (1) of the following:
4 (a) The average daily unpaid balance of the debt in the cycle.
5 (b) The unpaid balance of the debt or a median amount within a
6 specified range of unpaid balances of debt on approximately the
7 same day of the cycle. The day of the cycle need not be the day
8 used in calculating the credit service charge (IC 24-4.5-2-201(6))
9 or loan finance charge (IC 24-4.5-3-201 and IC 24-4.5-3-508), but
10 the specified range shall be the range used for that purpose.
11 (c) The unpaid balances of principal calculated according to the
12 actuarial method.
13 (d) The amount of the insurance benefit for the cycle.
14 SECTION 13. IC 24-4.5-7-102, AS AMENDED BY P.L.69-2018,
15 SECTION 25, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
16 JULY 1, 2022]: Sec. 102. (1) Except as otherwise provided, all
17 provisions of this article applying to consumer loans, including
18 IC 24-4.5-3-502.2, apply to small loans, as defined in this chapter.
19 (2) Subject to subsection (7), a person may not regularly engage in
20 Indiana in any of the following actions unless the department first
21 issues to the person a license under this chapter:
22 (a) The making of small loans.
23 (b) Taking assignments of small loans.
24 (c) Undertaking the direct collection of payments from or the
25 enforcement of rights against debtors arising from small loans.
26 (3) Subject to subsection (4), a person that seeks licensure under
27 this chapter:
28 (a) shall apply to the department for a license in the form and
29 manner prescribed by the department; and
30 (b) is subject to the same licensure requirements and procedures
31 as an applicant for a license to make consumer loans (other than
32 mortgage transactions) under IC 24-4.5-3-502.
33 (4) A person that seeks to make, take assignments of, or undertake
34 the direct collection of payments from or the enforcement of rights
35 against debtors arising from both:
36 (a) small loans under this chapter; and
37 (b) consumer loans (other than mortgage transactions) that are not
38 small loans;
39 must obtain a separate license from the department for each type of
40 loan, as described in IC 24-4.5-3-502(5).
41 (5) This chapter applies to:
42 (a) a lender;
SB 352—LS 6946/DI 101 23
1 (b) a bank, savings association, credit union, or other state or
2 federally regulated financial institution except those that are
3 specifically exempt regarding limitations on interest rates and
4 fees; or
5 (c) a person, if the department determines that a transaction is:
6 (i) in substance a disguised loan; or
7 (ii) the application of subterfuge for the purpose of avoiding
8 this chapter.
9 (6) A loan that:
10 (a) does not qualify as a small loan under section 104 of this
11 chapter;
12 (b) is for a term shorter than that specified in section 401(1) of
13 this chapter; or
14 (c) is made in violation of section 201, 401, 402, 404, or 410 of
15 this chapter;
16 is subject to this article. The department may conform the loan finance
17 charge for a loan described in this subsection to the limitations set forth
18 in IC 24-4.5-3-508(2). IC 24-4.5-3-201(1)(b).
19 (7) Notwithstanding IC 24-4.5-1-301.5, for purposes of subsection
20 (2), a person "regularly engages" in any of the activities described in
21 subsection (2) with respect to a small loan if the person:
22 (a) performed any of the activities described in subsection (2)
23 with respect to a small loan at least one (1) time in the preceding
24 calendar year; or
25 (b) performs or will perform any of the activities described in
26 subsection (2) with respect to a small loan at least one (1) time in
27 the current calendar year if the person did not perform any of the
28 activities described in subsection (2) with respect to a small loan
29 at least one (1) time in the preceding calendar year.
30 SECTION 14. IC 24-4.5-7-104, AS AMENDED BY P.L.216-2013,
31 SECTION 13, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
32 JULY 1, 2022]: Sec. 104. (1) "Small loan" means a loan:
33 (a) with a principal loan amount that is at least fifty dollars ($50)
34 and not more than five hundred fifty dollars ($550); and
35 (b) in which the lender holds the borrower's check for a specific
36 period, or receives the borrower's written authorization to debit
37 the borrower's account (other than as a result of default) under an
38 agreement, either express or implied, for a specific period, before
39 the lender:
40 (i) offers the check for deposit or presentment; or
41 (ii) exercises the authorization to debit the borrower's account.
42 (2) The amount of five hundred fifty dollars ($550) in subsection
SB 352—LS 6946/DI 101 24
1 (1)(a) is subject to change under the provisions on adjustment of dollar
2 amounts (IC 24-4.5-1-106). However, notwithstanding
3 IC 24-4.5-1-106(1), the Reference Base Index to be used under this
4 subsection is the Index for October 2006.
5 (3) Notwithstanding:
6 (a) IC 24-4.5-3-508.1(3); and
7 (b) IC 24-4.5-3-508.1(14);
8 a supervised loan made under IC 24-4.5-3-508.1 after June 30,
9 2022, is not considered a small loan that is subject to this chapter
10 if the supervised loan is made in compliance with IC 24-4.5-3-508.1.
11 SECTION 15. IC 24-4.5-7-411 IS AMENDED TO READ AS
12 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 411. Finance charges
13 made in compliance with this chapter are exempt from:
14 (a) IC 24-4.5-3-508, in the case of a small loan made before
15 July 1, 2022;
16 (b) IC 24-4.5-3-508.1, in the case of a small loan made after
17 June 30, 2022; and
18 (c) IC 35-45-7.
19 SECTION 16. IC 28-7-5-28 IS AMENDED TO READ AS
20 FOLLOWS [EFFECTIVE JULY 1, 2022]: Sec. 28. (a) The maximum
21 rate of interest charged by pawnbrokers shall be the same as the
22 maximum loan finance charge for supervised lenders under
23 IC 24-4.5-3-508(2). consumer loans set forth in
24 IC 24-4.5-3-201(1)(b). For purposes of this subsection:
25 (1) the term of a loan commences on the date on which the loan
26 is made;
27 (2) differences in lengths of months are disregarded; and
28 (3) each day is counted as one-thirtieth (1/30) of a month.
29 The minimum term of a loan made by a pawnbroker is one (1) month.
30 However, on loans paid in full within the first month, the pawnbroker
31 may charge one (1) month's interest.
32 (b) Interest shall not be deducted in advance, neither shall the
33 pawnbroker induce or permit any borrower to split up or divide any
34 loan or loans for the purpose of evading any provisions of this chapter.
35 (c) If a pawnbroker charges or receives interest in excess of that
36 provided in this section, or makes any charges not authorized by this
37 chapter, the pawnbroker shall forfeit principal and interest and return
38 the pledge upon demand of the pledger and surrender of the pawn
39 ticket without the principal or interest. If such excessive or
40 unauthorized charges have been paid by the pledger, the pledger may
41 recover the same, including the principal if paid, in a civil action
42 against the pawnbroker.
SB 352—LS 6946/DI 101 25
1 SECTION 17. IC 35-45-7-2, AS AMENDED BY P.L.158-2013,
2 SECTION 536, IS AMENDED TO READ AS FOLLOWS
3 [EFFECTIVE JULY 1, 2022]: Sec. 2. A person who, in exchange for
4 the loan of any property, knowingly or intentionally receives or
5 contracts to receive from another person any consideration, at a rate
6 greater than two (2) times the rate specified in IC 24-4.5-3-508(2)(a)(i),
7 IC 24-4.5-3-201(1)(b), commits loansharking, a Level 6 felony.
8 However, loansharking is a Level 5 felony if force or the threat of force
9 is used to collect or to attempt to collect any of the property loaned or
10 any of the consideration for the loan.
SB 352—LS 6946/DI 101 26
COMMITTEE REPORT
Madam President: The Senate Committee on Insurance and
Financial Institutions, to which was referred Senate Bill No. 352, has
had the same under consideration and begs leave to report the same
back to the Senate with the recommendation that said bill be
AMENDED as follows:
Page 3, line 14, delete "prohibited, other than in the case of a
supervised loan made" and insert "prohibited.".
Page 3, delete line 15.
Page 7, delete lines 13 through 42.
Delete page 8.
Page 9, delete lines 1 through 8.
Page 9, line 29, delete "or if the".
Page 9, delete line 30.
Page 9, line 31, delete "508.1 of this chapter after June 30, 2022,".
Page 15, line 3, delete "(4) and (5)," and insert "(5) and (6),".
Page 15, between lines 30 and 31, begin a new paragraph and insert:
"(3) A supervised loan made in compliance with this section is
exempt from IC 35-45-7.".
Page 15, line 31, delete "(3)" and insert "(4)".
Page 15, line 35, delete "(4)" and insert "(5)".
Page 15, line 38, delete "9(a)," and insert "10(a),".
Page 16, line 11, delete "(5)" and insert "(6)".
Page 16, line 19, delete "(6)" and insert "(7)".
Page 16, line 22, delete "(7)" and insert "(8)".
Page 16, line 31, delete "subsections" and insert "subdivisions".
Page 16, line 38, delete "(8)" and insert "(9)".
Page 17, line 7, delete "(9)" and insert "(10)".
Page 17, line 31, delete "5:00 p.m. on the second business day" and
insert "the end of the business day immediately following the day on
which the borrower receives the proceeds.".".
Page 17, delete lines 32 through 33.
Page 17, line 41, delete "(10)" and insert "(11)".
Page 18, line 11, delete "(11)" and insert "(12)".
Page 18, line 12, delete "by:" and insert "by returning to the lender
the cash amount of the principal originally contracted for not later
than the end of the business day immediately following the day on
which the borrower receives the proceeds.".
Page 18, delete lines 13 through 19.
Page 18, run in lines 12 through 20.
Page 18, line 24, delete "(12)" and insert "(13)".
SB 352—LS 6946/DI 101 27
Page 18, line 35, delete "(13)" and insert "(14)".
Page 18, line 41, delete "(14)" and insert "(15)".
Page 19, line 12, delete "(15)" and insert "(16)".
Page 19, line 36, delete "(14)." and insert "(15).".
Page 20, line 1, delete "four (4)" and insert "three (3)".
Page 20, line 8, delete "(16)" and insert "(17)".
Page 20, delete lines 17 through 35.
Page 20, line 36, delete "(19)" and insert "(18)".
Page 20, line 40, delete "chapter, or at such other time as the" and
insert "chapter:".
Page 20, delete lines 41 through 42.
Page 21, line 11, delete "(20)" and insert "(19)".
Page 21, line 18, delete "(20)" and insert "(19)".
Page 21, line 20, delete "(19)," and insert "(18),".
Page 21, line 25, delete "(19);" and insert "(18);".
Page 21, line 39, delete "(21)" and insert "(20)".
Page 22, line 5, delete "(22)." and insert "(21).".
Page 22, line 13, delete "(22)" and insert "(21)".
Page 22, line 15, delete "(21)." and insert "(20).".
Page 22, between lines 26 and 27, begin a new line block indented
and insert:
"(f) The total amount of maintenance fees collected on the
loans.
(g) The total amount of contractual underwriting fees on the
loans.".
Page 22, line 27, delete "(f)" and insert "(h)".
Page 22, line 28, delete "(g)" and insert "(i)".
Page 22, line 32, delete "(h)" and insert "(j)".
Renumber all SECTIONS consecutively.
and when so amended that said bill do pass.
(Reference is to SB 352 as introduced.)
ZAY, Chairperson
Committee Vote: Yeas 7, Nays 2.
SB 352—LS 6946/DI 101